The Reputation Stumble Rate Stumbles

March 09, 2014

The Reputation Stumble Rate Stumbles

Weber Shandwick’s annual calculation of reputation loss – the “stumble rate” – finds the lowest rate of reputation leadership loss since we began tracking this rate in 2010. During 2013, fewer than four in 10 of the world’s largest companies lost their esteemed status as their industries’ #1 most admired company during 2013. This is good news.

Each year Weber Shandwick measures the rate at which companies lose their #1 most admired position in their respective industries on the Fortune World’s Most Admired Companies survey. We call this the stumble rate. Between 2013 and 2014, 35% of the world’s largest companies experienced a stumble, down from last year’s 46%. For those companies that fell from their perches, there is likely extensive introspection and remedial action plans being discussed as I write this post.

The good news is the non-stumble rate of 65%. This means that about two-thirds of the industries in the Most Admired survey boast companies with durable reputations.

In addition to calculating the stumble rate, we also dig through the data, including the nine drivers of reputation, to glean some interesting insights about stumblers and non-stumblers. A stumbler is an industry whose top company last year is no longer the top company this year. What is interesting this year?

Two industries stumbled for the first time during 2013: Information Technology Services and Office Equipment & Electronics Wholesalers. This must hurt.

The Energy industry is a chronic stumbler. No Energy company has been able to hold the #1 spot for consecutive years. In the course of six years, there have been five different Energy leaders.

Five industries have stumbled four times since 2010. The most volatile industries are: Airlines, Life & Health Insurance, Medical Equipment, Motor Vehicle Parts and Health Care Wholesalers.

Six industries have a first-ever number one: Diversified Outsourcing Services, Food Production Information Technology Services, Medical Equipment, Mega Banks and Electronics and Office Equipment. Interestingly, the new leader in Medical Equipment is also new to the industry, having ranked #3 last year in Pharmaceuticals. This probably has to do with a change in their business mix.

For most of the stumblers, the People Management driver declined. The biggest drops in People Management (one of the nine drivers) were in Mega Banks (-3 ranking positions) and in Soaps and Cosmetics (also -3 spots). In 2013, the Mega Banks stumbler experienced a crisis-riddled year that pointed to lack of leadership oversight of personnel.

The Soaps and Cosmetics stumbler decline might not be reflection of its own management troubles, but rather strides made by the competitors. In one case, a well-respected CEO came out of retirement to replace his successor on an interim basis. One of his top priorities is to prepare a lineup of executives who will eventually replace him.

The other competitor announced – shortly before the Fortune survey was distributed to respondents – it was rolling out a supply chain collaboration platform to make its manufacturing more responsive to shifting customer tastes. This agile manufacturing process is expected to help add 1 billion new customers.

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Leslie Gaines-Ross

lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of reputations.